Partnering with Our Suppliers on Accountability
Our Supplier Code of Conduct and Supplier Expectations serve as the foundation for ensuring our supplier partners operate according to our high ethical standards. Our purchase order standard terms and conditions further reinforce our expectations. Importantly, our Supplier Code of Conduct applies all relevant aspects of ITW’s Statement of Principles of Conduct to our suppliers.
Read more about our supplier policies in Governance & Ethics.
Managing Our Supply Chain Efficiently and Responsibly
As part of our strategic sourcing effort, ITW takes several steps to ensure our supply chain is managed efficiently and responsibly.
- Local and Diverse Suppliers. Given our decentralized culture and global footprint, local suppliers are often the most efficient way to meet our supply chain needs. The longstanding relationships ITW businesses have with local suppliers help us source more responsibly while supporting the communities in which our businesses operate around the world. In our overall supply chain, approximately 50 percent of global third-party spend is with suppliers who are near the plants they serve. Additionally, approximately 4 percent of ITW’s U.S. third-party spend is on products and services from diverse suppliers, including racially/ethnically diverse, women-owned and veteran-owned companies.
- Efficient Distribution and Storage. We review our supply network to identify the most efficient logistics routes, methods and warehousing strategies that also allow ITW to meet or exceed customers’ expectations. The data-supported approach enables ITW and its businesses to recommend changes to distribution and storage patterns to drive efficiency and reduce the impact on the environment by eliminating unnecessary miles in freight routes.
- Supplier Index and Audits. We systematically review and rate our suppliers to evaluate their long-term viability, and therefore their ability to support our businesses sustainably going forward. This supplier index measures ITW’s suppliers on a variety of factors, including safety and environmental measures, financial data, leadership stability and operational metrics. We audit our suppliers to ensure they abide by our Supplier Code of Conduct. In 2019, we visited more than 1,300 suppliers representing 38 percent of global third-party spend, conducting either audits or other business reviews. These supplier visits allow us to have eyes on the operations of a significant portion of suppliers which supports our responsible sourcing due diligence efforts.
- Sustainable Materials. We focus our efforts on sourcing more environmentally-friendly and sustainable packaging materials for our products. As an example, we have significantly increased the use of recycled resins in certain businesses. We are also reducing cardboard use and requesting recycled cardboard where possible.
Sourcing our Minerals Responsibly
As a leader in both practice and policy, ITW is committed to taking necessary actions to ensure our supply chain utilizes tin, tantalum, tungsten and gold (commonly referred to as 3TG) only from certified conflict-free sources. These actions are consistent with Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and follow the international framework provided by the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. ITW is also engaged in several industry consortiums (Responsible Minerals Initiative, Automotive Industry Action Group’s Responsible Materials Working Group) and provides thought leadership to help improve approaches in this area. More information is available in our Conflict Minerals Policy and our SEC filing.
As reflected in our supplier policies, we are committed to taking proactive measures to ensure that our supply chain is free of any kind of modern slavery. We manage this commitment in a few ways:
- Training. We require our global sourcing employees, global employees who work with suppliers and customers on conflict minerals requests, and our Responsible Sourcing Committee members to undergo specific training on modern slavery and human trafficking in the supply chain. Training and additional materials are also available through an internal ITW website. To date, no issues of concern have been raised by our personnel regarding any potential modern slavery anywhere in our supply chain.
- Evaluation. We evaluate our purchased products against the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor for likely countries and industries prone to modern slavery to help identify any high-risk suppliers ITW may utilize.
- Education. Based on this evaluation, we provide education on our Supplier Code of Conduct explicitly with identified possible high-risk suppliers (based on the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor in likely countries) and ask them to certify their compliance. We have obtained certification of compliance to our Supplier Code of Conduct from 100 percent of these identified possible high-risk suppliers.
Further information can be found on the itw.com website, including our ITW Modern Slavery and Human Trafficking Statement.